Rebellion spreads on the culture of excessive boardroom pay

Shareholders have delivered yet another stinging rebuke to the culture of boardroom excess.

At mining giant Xstrata, almost 39 per cent of all votes failed to back the firm’s remuneration report, a substantial increase on last year’s pay protest.

Man Group, the world’s largest listed hedge fund, also suffered an investor backlash on pay yesterday, with a protest vote of almost 15 per cent.
This coincided with a gloomy trading update which revealed investors had pulled out $1billion (£617million) in the first three months of the year.

Face off: Alison Carnwath is accused of reigning over huge pay awards at Barclays and Man Group

Chief executive Peter Clarke was awarded $7million (£4.32million) for 2011, despite a tough year for the hedge fund.

Independent non-executive director Alison Carnwath, who received a
humiliating protest vote of 23.5 per cent as chair of Barclays
remuneration committee on Friday, proved even more unpopular with Man’s
shareholders where 32.6 per cent failed to back her re-election.

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The firm faces accusations of breaching company guidelines by allowing
her to help set pay and perks as she has been at the firm for 11 years
and can no longer be classed as ‘independent’.

The pay revolt at Xstrata, whose
chief executive Mick Davis took home a pay, pension and bonus package
worth £6million last year, came despite record profits of more than
£7billion in 2011.
But public concern about pay clearly had an impact on voting patterns,
with 76 per cent of the company’s share register turning out to cast
their vote on remuneration, compared to 70 per cent last year.

Stripping out the votes held by 34
per cent shareholder Glencore – Xstrata’s prospective merger partner –
just a third of Xstrata investors came out in support of its pay
arrangements.

Sir Martin Sorrell, boss of the
world’s largest advertising group WPP, is also risking a pay rebellion
at the firm’s annual meeting in June, after he was handed a package
including share awards worth a combined £14.6million, up 77 per cent on
last year’s total. Insurance giant Aviva is bracing itself for a revolt
from shareholders on Thursday.

Deborah Hargreaves, of the High Pay Centre, said the revolts reflected a rising tide of dissatisfaction with boardroom pay.

‘Companies can’t ignore their shareholders. This is the one constituency they really do have to pay attention to,’ she said.

Yesterday the powerful Association of
British Insurers threw its weight behind proposals spearheaded by
business secretary Vince Cable to give shareholders binding powers to
vote down ‘rewards for failure’.